sebi:WTM/TCN/07/CFD/JUNE/2008

SEBI · SEBI · 2007-06-05 · Dr. T.C. Nair, Whole Time Member

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Facts / Headnote

Exemption granted from complying with Regulation 11(1) of the Takeover Regulations with regard to the incidental increase in voting rights from 50.83% to 55.83%.

Provisions invoked

• s. 19
• s. 77A

Regulations

• Reg. 4
• Reg. 10
• Reg. 4(2)
• Reg. 11(1)
• Reg. 6
• Reg. 3(1)

Holding

SEBI granted exemption to Imperial Chemical Industries PLC from complying with Regulation 11(1) of the Takeover Regulations with regard to the incidental increase in its voting rights from 50.83% to 55.83%, consequent to the proposed buy-back offer of ICI India Ltd.

Full text

1.1 ICI India Ltd. (hereinafter referred to as ‘the target company’) is a company incorporated under the Companies Act, 1956, having its address at Geetanjali Apartment, 1st Floor, 8 B Middleton Street, Kolkata 700 071. The equity shares of the target company are inter alia listed on the National Stock Exchange of India Ltd. (NSE) and the Bombay Stock Exchange Ltd. (BSE) and Calcutta Stock Exchange Association Ltd. (CSE). 1.2 Imperial Chemical Industries PLC (hereinafter referred to as the acquirer) is the promoter of the target company and is holding 50.83% of the total paid up equity capital of the target company. 2.0 APPLICATION FOR EXEMPTION 2.1 The target company announced its plan to buy-back its equity shares upto Rs. 211.06 crore (equivalent to 25% of its total paid up equity capital and free reserves as on March 31, 2007) from the shareholders at a price not exceeding Rs.575/- per share in terms of the provisions of section 77A, 77AA of the Companies Act 1956 and the provisions of the Securities and Exchange Board of India (Buy– Back of Securities) Regulations, 1998 subject to the appropriate approvals. Due to the said buy-back offer, the voting rights of the acquirer would increase from the existing 50.83% and would become more than 55% of the outstanding equity share capital of the target company which would attract the provisions of Regulations 10 and 11(1) of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 199

c) The acquirer is not participating in the buy back offer of the Target Company. d) In the event the buy back offer of the target company, the acquirer’s existing shareholding (2,07,76,213 shares) though remains the same in terms of the number of shares would increase beyond 55% of the outstanding share capital of the target company. 2.3 The acquirer vide letter dated June 20, 2007 inter alia stated that the proposed buy back of shares of the target company is equivalent to 25% of its total paid up equity capital and free reserves as on March 31, 2007. It also stated that the target company could buy back a maximum of upto 36,70,600 shares (assuming the buy back price is at Rs.575 per share) and the same would increase the shareholding of the acquirer in the target company from the present 50.83% to 55.85%. The acquirer further stated that if the average buy back price is less that Rs.575 per share than more shares can be bought back by the target company which would result in the acquirer’s shareholding increasing beyond 55.85%. 2.4 The shareholding pattern of the target company before and after the proposed buy back offer (as per the aforesaid letter) is as under: Shareholders’ category Number of registered shareholders as on date of application Shareholding Before the proposed buy back (as on March 31, 2007) Proposed Buy Back Shareholding After the proposed Buy Back Number of shares / total voting rights held % of shares / total voting capital held Number of Shares Number

3,670,600 16,423,799 44.15 Other Institutions 6,026,842 6,026,842 14.75 Corporate Bodies 5,017,172 5,017,172 12.28 Individuals 3,925,650 3,925,650 9.60 Others 87,883 87,883 0.22 Total 40,870,612 40,870,612 100.00 3,670,600 37,200,012 100.00 3.0 RECOMMENDATION OF THE TAKEOVER PANEL 3.1 The aforesaid application dated June 5, 2007 and the aforesaid letter was forwarded by SEBI to the Takeover Panel in terms of sub-regulation (4) of Regulation 4 of the Takeover Regulations. The Takeover Panel vide its report dated July 9, 2007 (forwarded by the Takeover Panel vide letter dated July 11, 2007) recommended for the grant of exemption as sought by the acquirer. 4.0 FURTHER SUBMISSIONS 4.1 The target company vide letter dated August 27, 2007 informed SEBI that it would limit its buy back to a maximum of 56,58,000 equity shares thereby limiting the holding of the acquirer to a maximum of 59%. Further, vide letter dated October 29, 2007, the target company undertook that it would limit its buy back to a maximum of 36,57,126 equity shares which would in turn increase the holding of the acquirer to a maximum of 55.83% of the equity capital of the target company from its current holding of 50.83%. 4.2 In the meanwhile, the application submitted by the acquirer along with another application were remitted back to the panel by SEBI for their consideration and recommendation, as it involved increase in shareholding of the promoters, pursuant to the buy back by the respective target companies.

Source: SecMarx — sebi:WTM/TCN/07/CFD/JUNE/2008. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.